Nationalökonomie (1873)

“Nationalökonomie,” signed “M.” and attributed to Carl Menger, is a review article presenting selected findings from Cairnes’s Essays in Political Economy theoretical and applied. Its focus is the connection between Australian gold discoveries and wool competition in European markets, particularly their consequences for Austrian livestock breeders and wool manufacturers. Moving from mining earnings to wages, production costs, and changing demand for pastoral products, the article explains how a disturbance in one industry reorganizes an economy and alters its international trade.

The argument begins with the discovery of Australian goldfields in 1851. Ordinary workers could suddenly earn approximately a quarter-ounce of gold daily through work requiring neither substantial capital nor specialized skill. The prospect drew labour away from established occupations:

Die unmittelbare Folge jener Entdeckung war eine allgemeine Desorganisation der Industrie in allen australischen Colonien.

English translation: The immediate consequence of that discovery was a general disorganization of industry in all the Australian colonies.

This disruption was more than a speculative fever. Mining offered an alternative livelihood against which other employers had to compete. Although hardship, uncertain returns, and expensive provisions qualified its attractiveness, average gold yields became the benchmark for money wages. The article follows this mechanism through its reversal: as richer deposits were exhausted and extraction became more difficult, mining earnings fell, pulling wages down with them.

Selbstverständlich fielen mit der Abnahme der Goldausbeuten fast parallel die Arbeitslöhne in Australien.

English translation: Naturally, wages in Australia fell almost in parallel with the decline of the gold yields.

Wages nevertheless remained more than twice their pre-discovery level. The review then concentrates on pastoral production, where this continuing cost pressure threatened the colony’s principal exports. Before the discoveries, wool and tallow had sustained livestock breeding; meat, unsuitable for export in its ordinary form, faced limited domestic demand and was often boiled down for its tallow. Gold mining drew away shepherds and shearers, compelling pastoral employers to offer higher wages. Crucially, the resulting costs could be passed on more readily to domestic consumers than to buyers in international markets. Australian wool producers could not simply raise export prices sufficiently to preserve their position.

The same movement that threatened pastoral production also supplied its rescue. Concentrations of people in the gold districts generated a sudden demand for meat, whose price rose fourfold. Higher meat receipts covered part of the increased production costs, enabling breeders to remain competitive in wool:

Auf diese höchst merkwürdige Weise wurde der australische Wollhandel gerettet.

English translation: In this most remarkable manner the Australian wool trade was saved.

The conceptual hinge is the changing commercial importance of products obtained from the same pastoral enterprise. Wool could continue to reach European markets because meat now sustained a greater share of the business. The article therefore treats export competitiveness as dependent not merely on an export commodity’s own demand, but also on domestic markets for associated products.

Seither ist aber die Wolle in dem wirthschaftlichen Calcul des australischen Farmers in den Hintergrund getreten und der australische Fleischverbrauch ist die Stütze und der Träger der dortigen Viehzucht geworden.

English translation: Since then, however, wool has receded into the background in the economic calculation of the Australian farmer, and Australian meat consumption has become the support and mainstay of stock-raising there.

The conclusion turns this shift into a forecast relevant to European breeders. Australian livestock production would expand chiefly with local meat consumption rather than European wool demand, limiting the competitive threat previously posed by Australian wool. Yet the article identifies an important qualification: exports of preserved meat, already substantial, could renew the impetus to wool exports. Its significance lies in this tightly connected causal explanation, drawn from Cairnes: gold yields reshape labour incentives, wages constrain internationally traded products, and a new market for meat changes both the basis and the limits of pastoral expansion.